Increase in the Medicaid Penalty Divisor – Effective April 1, 2020

The penalty divisor is the average daily cost of nursing home services in New Jersey. It is adjusted annually after a survey of all nursing facilities in New Jersey is conducted. The penalty divisor is used to determine the penalty period for an individual applying for Medicaid Long-Term Services and Supports when that individual transfers resources/assets for less than fair market value within the “look-back” period, i.e., the five (5) year period prior to the date of the Medicaid application . Effective April 1, 2020, the penalty divisor increased from $351.84 to $357.67 per day. The length of the penalty period is calculated by determining the value of the transferred resource/asset(s) and then dividing the value of the gifted asset(s) by the daily penalty divisor and then rounding down. The penalty clock begins on the date that an individual applies for Medicaid and is determined to be otherwise eligible, but for the penalty resulting from the gifted asset.

Medicaid Communication No. 20-05 is attached here –  [gview file=””]

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